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In July the Standard & Poor’s 500 gained 9.1%. The index went up 4.3% in the last week alone.

The obvious question is how much longer does this rally have to run?

The big test comes on Friday, August 5, with the jobs report for July.

If it’s too strong, the report is likely to reignite fears that the Federal Reserve will aggressively raise interest rates.

If it’s too weak, the report could lead to fears of a recession. (Although I think the report would need to be really bad to send recession fears higher. At the moment, the market is inclined to think that slower economic growth is a good thing. That sentiment has led to a big drop in yield on the 10-year Treasury to 2.65% from 3.47% at the end of June.)

Economists are expecting the economy to have added 250,000 jobs in July. That would be down from 372,000 new jobs in June. But 250,000 would be right in the recent neutral zone for this economy.

It’s unlikely that the report will reflect the recent wave of job cuts announced by companies from Amazon (AMZN) to Spotify (SPOT). (On July 27, Spotify announced that it would lay off 10% of its workforce by the end of the day. But the job report’s establishment survey is conducted during the pay period that includes the 12th of each month.)

In my opinion the jobs report is likely to provide evidence that we’re still just beginning this recession and not even close to the end of it.

The week is likely to start off with a positive bang from the tech sector. Chip maker Advanced Mirco Devices (AMD) is scheduled to report after the market close in New York on Tuesday, August 2. The Wall Street forecast is looking for June quarter earnings of 94 cents a share, a big 62% jump from the 58 cents a share reported for the June quarter in 2021. Advanced Micro has surprised strongly in the last two quarters with a 23% positive surprise for the March quarter, for example. Earnings that beat the very positive Wall Street sentiment would add momentum to the tech rally of last week and would be seen as evidence that the technology is where to be in the current economic slowdown.